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Alan Mulally Or Jack Welch: What Type Of Leader Do You Want To Be?

Last April, Maggie Lake was interviewing me at CNN’s studio in New York about Alan Mulally, who was about to announce that he was retiring as CEO of
Ford Motor Co.

Lake has interviewed a lot of big-name executives. She’s seen them up close. And after the cameras stopped rolling, she told me that Mulally was the one who’d impressed her most of all. Lake said she wished there were more like him.

“Why do you think there are so few Alan Mulallys?” she asked.

“Because there are so many Jack Welches,” I said.

For at least 14 years now, the management model Jack Welch created at
General Electric Corp. has dominated American business. It’s a fist-pumping, take-no-prisoners style of leadership that has spawned a generation of CEOs committed to winning at all costs.

Welch’s disciples trusted their guts and shot from the hip. They blew things up, including employees who found themselves on the wrong end of the “vitality curve.” Many members of the Jack pack achieved great success, at least in the short term. But their success wasn’t always sustainable, and many did enormous damage to their employees, customers, business partners and companies in the process (I’m looking at you, Bob Nardelli).

In 2006, Bill Ford Jr. hired Mulally, then president of
Boeing Co.’s commercial aircraft division, to save his struggling car company. Like its crosstown rivals,
General Motors and Chrysler, Ford. had been ceding market share to its foreign rivals since the early 1970s and was now on the brink of bankruptcy. But unlike GM and Chrysler, Ford — under Mulally’s leadership — would save itself.

Against the backdrop of the worst economic crisis since the Great Depression, Ford would restructure its global operations, remake its entire product lineup, reconnect with consumers and become one of the most profitable — and respected — automakers in the world. It would do it without a government bailout. And it would do it using the same management model that Mulally had already used to save Boeing.

Instead of trusting his gut to come up with the answers, as Welch often boasted he did, Mulally sought them from people at all levels of the company.

After arriving in Dearborn in September 2006, Mulally eschewed the executive dining room on the top floor of Ford’s world headquarters and ate in the cafeteria. He would pick a table with an empty chair, ask if he could sit down and then start asking the startled engineers, sales reps or accountants how they thought Ford was doing and what it could do better.

If an employee sent him an email, he would respond personally.

When an engineer sent one complaining that Ford’s hood designs were needlessly complex, Mulally asked him to come up to his office with the schematics. They studied them together and, on the spot, Mulally made the guy the head of new task force charged with addressing the problem.

At the time, I was covering Ford for The Detroit News. During his first visit to the newspaper, one of my colleagues asked Mulally when he was going to start firing the old guard and bringing in people from Boeing. Mulally looked confused.

“I’m not,” he said. “Ford has the talent it needs to save itself.”

One of Mulally’s predecessors, Jacques Nasser, was a Jack Welch disciple. In 1999, he’d implemented a forced ranking system for employees at Ford with disastrous results. Like Welch, Nasser required managers to rate every employee and assign a certain percentage of them a failing grade. Other than triggering a number of class-action lawsuits, all it succeeded in doing was forcing some of Ford’s most talented employees out of the company.

Instead of dividing his employees into winners and losers as Welch advocated, Mulally sought to inspire them all and rally them to his cause.

He even convinced the United Auto Workers to make major concessions and accept painful job cuts — not by threatening the union, but by opening the company’s books to the UAW so it could see just how serious Ford’s financial woes were. At the same time, he promised to insource production if the union helped Ford lower labor costs.

Mulally used a similar approach with Ford’s dealers and suppliers.

In just four years, he took Ford from the brink of bankruptcy to record profits — not by detonating a neutron bomb, but by respecting the company’s stakeholders and making them invested in its success.

Mulally calls his method “Working Together.”

As the name implies, it is a team-based approach to leadership.

At both Boeing and Ford, Mulally created a matrix organization to ensure that every business unit and function was represented. And at both companies, Mulally’s first order of business was to establish the ground rules that senior leadership team would operate under. Those included “people first,” “respect, listen, help and appreciate each other” and “no joke’s at anyone else’s expense.”

It was a far cry from the crucible Jack Welch created at GE, where the weak went to the wall and only the strong survived.

As Ford’s turnaround gained traction, Mulally became the darling of the financial press. But he was constantly pulling other members of his team into the spotlight, making sure that everyone knew he was not saving Ford singlehandedly.

Welch-wannabe Nasser had constantly upstaged his subordinates, casting himself in the starring role at even the most mundane press conferences and taking credit for everything from the success of the company’s SUVs to the angle of their beltlines.

While Welch worked to decentralize GE and take the company into new businesses, Mulally worked hard to consolidate Ford and leverage its global scale.

Welch axed money-losing divisions. Mulally sold off profitable ones to narrow Ford’s focus to the critical task of fixing the Blue Oval.

The one thing Welch and Mulally have in common is their love of data. That’s not surprising, given that they both started out as engineers. They believed numbers had the power to illuminate truth and cut through the clutter of corporate politics and boardroom personalities.

That belief led Welch to become the sensei of the Six Sigma movement, which unquestionable improved quality not just at GE, but at many of the other companies that adopted it.

It led Mulally to create the Business Plan Review, or BPR, process — a powerful management tool that brings all of the company’s leaders together for a short weekly meeting in which they take an unflinching look at the current state of the business and its projected trajectory, identify challenges and opportunities that need to be addressed and deal with them together as a team.

“I talked the least in those meetings,” Mulally told me recently. “It’s important to seek understanding before seeking to be understood.”

I am a bestselling author, speaker and president of Red Team Thinking LLC. I teach organizations and individuals around the world how to see the truth, tell the truth and

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I am a bestselling author, speaker and president of Red Team Thinking LLC. I teach organizations and individuals around the world how to see the truth, tell the truth and act on the truth – because believe it is the lies we tell ourselves that hold us back. My books include Red Teaming: How Your Business Can Conquer the Competition by Challenging Everything and American Icon: Alan Mulally and the Fight to Save Ford Motor Company. I also lecture at U.C. Berkeley's Haas School of Business.